Car giants’ ménage à trois may end in tears

Citroën, Peugeot and Toyota’s greatest challenge when they launch their jointly developed city car will be preventing consumers from playing “spot the difference” between the versions produced under the three different car marques.

In a radical departure, Toyota, the world’s second-largest car manufacturer, has joined up with PSA Peugeot Citroën to develop and produce a new small car for the European market that will be marketed separately by each of the three brands.

The first official picture of their joint labour was unveiled last week showing three cars, each produced by one of the brands, displayed side by side. But the move, intended to stop unofficial pictures being leaked to the press as production begins, only served to highlight the major similarities between the cars.

The cars, separately badged as the Citroën C1, Peugeot 107 and Toyota Aygo, have been jointly engineered and will be manufactured on the same production line in a new, specially built factory in the Czech Republic. The plant is expected to produce 300,000 cars a year, a number that will be divided equally between the three marques.

While the final products may be almost identical, the very different corporate cultures of Toyota and PSA have led to some behind-the-scenes bust-ups and considerable sensitivity on both sides about discussing the project. The car is officially launched at the Geneva Motor Show next March, before going on sale in Europe later in the year. It will be the cheapest in each manufacturer’s line-up (UK prices are expected to be about £5,500) and is presented as being “particularly suited for urban driving”.

But with all major structural and performance aspects of the design being identical, the brands have been left with only minor design features, individual brand power and their own marketing campaigns to help distinguish the triplets from one another.

PSA Peugeot Citroën spokeswoman Dominique Morgan says: “You may think the cars look similar, but the marketing will be very different and the cars will be very different inside.” Toyota GB commercial director Paul Philpott is similarly keen to stress the differences between the cars and suggests that observers should wait until they see and drive the actual cars before drawing conclusions.

Citroën UK spokesman Mark Raven also downplays any similarities. He says: “Consumers appreciate the benefits of scale which mean that we can offer a car at a price that won’t break the bank.”

However, Corporate Edge chairman Chris Wood says: “Low-cost production games being played by manufacturers are not invisible to consumers and are eroding brand integrity.”

Although money may have been saved in producing a joint platform, Cardiff Business School assistant director of automotive research Paul Nieuwenhuis believes that the costs of visually differentiating cars between brands will be considerable. As more car manufacturers consider joint ventures, rather than corporate mergers, marketing is left as the primary area in which clear demarcation can be achieved. “This is why there has been so much emphasis on brand – in many respects it is all that the car companies have left,” he adds.

Nieuwenhuis believes the core market for the Aygo, C1 and 107 will be central and Eastern Europe, where the need for basic, affordable “automobility” is key. The city car segment is also expanding in western Europe, where DaimlerChrysler has already launched the Smart car.

As car manufacturers increasingly jump into bed with each other, Wood believes the traditional canons of differentiation, such as performance, style and reliability, will become increasingly irrelevant in the car sector. Wood claims that this could result in the automotive industry being faced with the same change in consumer thinking that has already taken place in the hotel and air travel markets, where people have opted to save cash with brands such as easyJet and Travelodge.

This could prove to be a problem for car manufacturers as they have a range of different models. Former Toyota marketing director Mike Moran believes that, for Toyota, the challenge will be how it positions the Aygo against the Yaris, the manufacturer’s smallest and cheapest car, rather than differentiating it from Citroën or Peugeot’s version. He warns: “The danger is that sales will be made substitutionally rather than incrementally.”

Perhaps in acknowledgement of this issue, Toyota has not handed the task of advertising the Aygo to its usual agency Saatchi & Saatchi, and has appointed Clemmow Hornby Inge to produce pan-European advertising for the new car.

Whatever similarities are apparent now between the Aygo, C1 and 107, the real differences will not become clear until marketing strategies for the three cars are unveiled. As Philpott says: “Its all down to the power of marketing and brand. Come the spring, the gloves are off.”